Is Connected TV (CTV) Ready for Direct Response Primetime?

Image portraying connected TV (CTV)

When social distancing recommendations and stay at home orders went into effect in early March, direct response marketers were challenged to adjust budgets and pivot strategies to reach their homebound consumers. We have all been hearing about the promise of connected TV (CTV) for several years now, and it appears COVID-19 has pushed it to the forefront, with marketers increasing CTV advertising spend by 35% in Q2 2020.

But with all the hype, is CTV the direct response channel that marketers have been waiting for? Or should marketers examine a different approach to direct response in our new pandemic normal?

Although less shiny and new, direct mail has a strong history in successful people-based marketing and is well positioned to serve as the foundation of an omnichannel strategy. Before shifting CTV centerstage, marketers should consider how they can leverage direct mail’s offline audiences to improve the performance and profitability of CTV investments.

The promise of CTV

The case for CTV advertising is compelling, especially when considering 1.8 million subscribers “cut the cord” from traditional pay television services to embrace subscription based streaming services, and the pandemic prompted boost in streaming hours. Audience reach is not the only opportunity that is drawing direct response marketers towards CTV.  The great appeal for marketers is the ability to bring all the beloved aspects of digital marketing to the television channel, especially granular targeting, retargeting and better measurement. There can be little doubt that CTV is here to stay and will become the norm in households across the United States if it isn’t already.

Yet, while CTV advertising has accelerated in recent months, the relatively young channel brings with it considerable complications for marketers and brands to overcome.

The U.S. is home to over 200 OTT (over-the-top) streaming providers, and CTV devices range from smart TVs and HDMI sticks to gaming consoles and Blu-ray players. This labyrinth of multiple platforms complicates creative development, tracking ads, gathering performance metrics and attributing conversions. Difficulties with accurate targeting and user identification across multiple platforms can result in oversaturation as consumers are repeatedly served the same ad across numerous devices. Ad inventory can also be complex and intimidating. The relatively high CPMs for CTV means fraudsters are working hard to exploit this new lucrative channel, as illustrated in a recent ad fraud operation that skimmed 28% of total volume in January.

And of course, there is always the pivotal obstacle of attribution – does CTV move the needle? By how much? And do the incremental returns outrun the costs? Any conversions you see in your CTV reports are going to be overwhelming. Brands serious about understanding the value of CTV need to have a multi-touch attribution model in place so they can assign credit appropriately and determine if CTV is delivering ROI.

There is no doubt that CTV should be tested and will undoubtedly become a permanent fixture of the marketing mix. However, for brands that are starting to max out digital advertising ROI, there is an overlooked offline channel that can deliver much of what is loved about digital. That channel is direct mail. What’s more, direct mail works best when integrated with digital channels, including CTV.

Why the original star of direct response still performs

Throughout history, direct mail has propelled the growth of DTC brands, and advertisers continued to recognize its strength as volumes steadily rose in 2019. With the audience of home-bound consumers stronger than ever before, direct mail presents a huge opportunity for brands who have maxed out digital platforms or are testing the viability and reach of new channels in the midst of this year’s environment. 

As a traditional direct response channel, one obvious advantage to direct mail is that it is tried and true, with established processes for execution and performance measurement. It also excels at customer acquisition (check our mail’s response rate) for a variety of other reasons:

  • Audience Targeting: The best performing direct mail campaigns originate from 1st party customer data used to build lookalike models, combined with 3rd party data sets. This allows brands to reach their highest potential prospects.
  • Comprehensive Testing: The ability to simultaneously test multiple creative concepts, offers and audiences is possible without expensive multi-variate testing. Hybrid testing approaches provide direct marketers the insights to quickly identify winning combinations and reduce CPAs.
  • Scale: Direct mail offers marketers the ability to scale offline customer acquisition. Using modeling, marketers can cherry-pick from the closest lookalikes initially and expand reach with lower deciles of the models over time or by testing several unique partners, models and databases.
  • Attribution: Since direct mail starts with a specific list of prospects and a physical address, it naturally lays a solid foundation for matchback analysis. Paired with holdout audiences, this allows data teams to confidentially attribute the channel’s impact on purchase behavior.
  • Impactful: Unlike its digital counterparts, mail is a tangible, hand-delivered form of media. Direct mail is effective because physical advertisements are proven to stimulate emotions and increase a brand’s desirability. In addition, direct mail is appreciated by Millennials, the largest generation of consumers.

Cast your lineup for an award-winning performance

Marketers agree multichannel campaigns are the most effective at engaging and converting customers. Not only can direct mail be swiftly integrated with digital campaigns, it can also be incorporated into CTV strategy by onboarding and activating direct mail audiences into any demand side platform with access to CTV inventory. Even better, with holdouts and a matchback attribution to the original mailing list, you now have a way to measure the incremental lift of the CTV investment to optimize program performance.

Adopting CTV into the direct marketing lineup is an inevitable pivot as consumers shift their focus to on-demand programs. Yet CTV alone may not provide the measurable results and scale that direct response marketers need right now. Brands should consider testing direct mail to determine its viability, then look to integrate digital channels like CTV into the campaign, to deliver maximum and attributable performance.

Partnering with an experienced direct response agency will help brands efficiently integrate channels to reach their targeted audience and drive response. Contact SeQuel Response to learn more about the science behind our approach.

Featured in BRAND United on 7.21.2020